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SYNDICATE 1925
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Syndicate 1925
Key performance indicators
2024
Annual basis
$’m
Gross premium written
41.7
Net premium written
21.8
Net premium earned
14.7
Profit for the financial year
0.9
Claims ratio
57%
Expense ratio
37%
Combined ratio
94%
“
Cyber insurance and reinsurance
is becoming established in the Lloyd’s market and is receiving excellent support
from a wide range of brokers and insureds in the sector. We believe the syndicate is well positioned to take
advantage of new underwriting opportunities as the sharing economy develops and to benefit from general
improvements in the rating environment.
”
David Ibeson, Group CEO
Syndicate 1925
Contents
Page
Directors and administration
2
Syndicate annual accounts for the year ended 31 December 2024
Report of the directors of the managing agent
3
Statement of managing agent’s responsibilities
12
Independent auditor’s report to the members of Syndicate
1925
13
Profit and loss account
16
Statement of changes in members’ balances
17
Balance sheet
18
Statement of cash flows
19
Notes to the annual accounts
20
Syndicate 1925
Directors and administration
2
Managing agent
Registered office
One Bishopsgate
London
EC2N 3AQ
Company registration number
09181578
Company secretary
PC Bowden
Directors
AC Winther
(Non-Executive Chair)
FA Buckley
(Non-Executive Director)
M Cramér Manhem
(Non-Executive Director)
SR Davies
(Non-Executive Director)
SE Hill
(Non-Executive Director)
RD Littlemore
(Non-Executive Director)
DCB Ibeson
(Chief Executive Officer)
TL McHarg
VVV Mistry
JR Slaughter
Active underwriter
CAJ Baddeley
Registered auditor
Deloitte LLP
Statutory Auditor
2 New Street Square
London
EC4A 3BZ
Syndicate 1925
Report of the directors of the managing agent
3
The directors of the managing agent (
together, “the Board”)
present their annual report and audited annual
accounts, which incorporates the strategic review, for Syndicate 1925
(“the syndicate”)
for the year ended 31
December 2024.
The annual accounts are prepared using the annual basis of accounting as required by Statutory Instrument No.
1950 of 2008, The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008
(“Lloyd’s Regulations 2008”)
and applicable accounting standards in the United Kingdom and Republic of Ireland
including Financial Reporting Standard 102 (
“
FRS102
”
) and Financial Reporting Standard 103 (
“FRS 103”
) in
relation to Insurance Contracts
and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as modified by the
Frequently Asked Questions Version 1.1 issued by Lloyd’s
.
Principal activity
This report covers the business of Syndicate 1925, which was established for the 2024 year of account as a Special
Purpose Arrangement
(“SPA”)
. Trading as Envelop SPA 1925, the principal activity of the syndicate is writing Cyber
Reinsurance business
through a strategic partnership with Envelop Risk (“Envelop”)
. The business is written by
Syndicate 1971 then ceded as an 80% quota share reinsurance of the Cyber Reinsurance class to the syndicate.
The quota share contract with Syndicate 1971 operates on a funds withheld basis. Under this arrangement all
transactions are undertaken by Syndicate 1971 on behalf of the syndicate, and Syndicate 1971 retains the
accumulation of net cash flows until closure of the year, when the declared result will be remitted to, or collected
from, members. Investment income arising on the business is allocated to the funds withheld balance.
Syndicate 1925
trades through the Society of Lloyd’s (‘’Lloyd’s'’) worldwide licences and has the benefit of the
Lloyd’s brand
and rating
. Lloyd’s has an A
+ (Superior) rating from A.M. Best, AA- (Very Strong) from Standard &
Poor’s and AA
- (Very Strong) from Fitch.
The syndicate’s capacity for the 2024 year of account was £
40m ($50.8
m at the Lloyd’s planning rate of $1.27).
Stamp capacity for the 2025 year of account is £50m ($63
m at the Lloyd’s planning rate of $1.26).
Apollo Syndicate Management Limited (“ASML”) is approved as a
managing a
gency at Lloyd’s and is authorised by
the Prudential Regulation Authority
(“PRA”)
. ASML is regulated by the Financial Conduct Authority
(“FCA”)
and the
PRA.
Results
Gross written premium amounted to $41.7m. The result for the year was a profit of $0.9m. Profits and losses are
distributed and called respectively by reference to the results of individual underwriting years.
ASML uses the key performance indicators shown in the table below to measure the performance of the syndicate
against its objectives and overall strategy. These indicators are assessed against plan and are subject to regular
review.
The syndicate predominantly writes business denominated in US Dollars and therefore reports in that currency.
2024
$’m
Gross premium written
41.7
Net premium written
21.8
Net premium earned
14.7
Profit for the financial year
0.9
Claims ratio
57%
Expense ratio
37%
Combined ratio
94%
Notes:
The claims ratio is the ratio of net claims incurred to net premiums earned.
The expense ratio is the ratio of net operating expenses to net premiums earned.
The combined ratio is the sum of the claims and expense ratios.
Syndicate 1925
Report of the directors of the managing agent
4
Review of the business
SPA Syndicate 1925 commenced underwriting for the 2024 year of account, writing US and International Cyber
Reinsurance business. Its business was written by way of a 80% quota share reinsurance of the Cyber Reinsurance
class written by Syndicate 1971.
The syndicate has written less premium than planned in 2024, reflecting higher competition than anticipated and
therefore less new business opportunities. Limited premium has been earned to date, which has been offset by
operating expenses incurred in the 2024 calendar year for the first year of account.
The reported result reflects the level of reserving for the business written. As a relatively new class of liability
business in an evolving area, data is limited and the reserving is highly judgemental. The business is expected to
be profitable, however a cautious approach to reserving has been adopted and there has been limited recognition
of underwriting profit at this stage of development.
The syndicate has written 74% of its planned income for the 2024 year of account. As a result, the gross written
premium forecast for the 2024 year of account has been reduced to $53.2m. The rating environment is expected to
remain stable in quota share and primary markets, whilst aggregate XOL/stop-loss markets are under more
pressure.
Cyber security is becoming
established in the Lloyd’s market and is receiving excellent support from a wide range
of brokers and insureds in the sector. We believe the syndicate is well positioned to take advantage of new
underwriting opportunities as the sharing economy develops and to benefit from general improvements in the rating
environment.
2024 calendar year result
The result for the 2024 calendar year is a profit of $0.9m. The 2024 calendar year result is the performance during
the year of the 2024 open year of account. The 2024 calendar year result is broadly in line with expectations in the
plan for the year. Notified claims experience in the calendar year for the 2024 year of account has been minimal
and within expectations.
Investment performance
The syndicate received an allocation of the investment return of $0.05m from Syndicate 1971. This represents the
investment income attributable to business undertaken by Syndicate 1971 on behalf of the syndicate.
Capital
For SPA Syndicate 1925, ASML
assesses the syndicate’s capital using the Lloyd’s Standard Model (“
LSM
”
). The
ultimate Solvency Capital Requirement (“SCR”) is subject to an uplift determined by Lloyd’s based on
its
assessment of the economic capital requirements for the Lloyd’s market in total. The SCR, together with the Lloyd’s
uplift is referred to as the Economic Capital Assessment (“ECA”). The ECA for the 2024 underwriting year was set
at 117% of capacity and for the 2025 underwriting year will be 117% of capacity.
Lloyd’s unique capital structure provides excellent financial security to policyholders and capital efficiency for
members. The Lloyd’s chain of security underlies the financial strength that ultimately backs insurance policies
written at Lloyd’s and has t
hree links:
1.
All premiums received by syndicates are held in trust as the first resource for settling policyholders’ claims;
2.
Every member is required to hold capital in trust funds at Lloyd’s which are known as Funds at Lloyd’s (“FAL”).
FAL is intended primarily to cover circumstances where syndicate assets are insufficient to meet participating
members’ underwriting liabilities
. FAL is set with reference to the ECAs of the syndicates that the member
participates on. Since member FAL is not under the control of the managing agent, it is not shown in the
syndicate accounts. The managing agent is, however, able to make a call on me
mbers’ FAL to meet liquidity
requirements or to settle underwriting losses if required; and
3.
Lloyd’s central assets are available at the discretion of the Council of Lloyd’s to meet any valid claim that cannot
be met through the resources of any member further up the chain. Lloyd’s also retains the right to request a
callable contribution equal to
5% of members’ capacity on the syndicate.
Syndicate 1925
Report of the directors of the managing agent
5
Principal risks and uncertainties
ASML has an
established Enterprise Risk Management (“ERM”) function for the syndicate with clear terms of
reference from the ASML Board and its committees as part of a three lines of defence model. The ASML Board and
its committees review and approve the risk management policies and meet regularly to approve any commercial,
regulatory and organisational requirements of these policies.
The risk appetites are set annually as part of the syndicate business planning and solvency capital requirement
setting process. The ERM function is also responsible for maintaining the Own Risk and Solvency Assessment
(“ORSA”) processes and provides regul
ar updates to the ASML Board. The ORSA report is approved by the ASML
Board annually.
ASML recognises that the syndicate’s business is to accept risk which is appropriate to enable it to meet its
objectives and that it is not realistic or possible to eliminate risk entirely. The principal risks and uncertainties facing
the syndicate have been identified as strategic risk, insurance risk, regulatory risk, operational risk, and financial
risk (comprising credit risk, liquidity risk and market risk). A risk owner has been assigned responsibility for each
risk, and it is the responsibility of that individual periodically to assess the impact of the risk and to ensure appropriate
risk mitigation procedures and controls are in place and operating effectively. External factors facing the business
and the internal controls in place are routinely reassessed and changes made when necessary. The overarching
risk framework is overseen by the ASML Risk Committee on behalf of the ASML Board. The risk culture of the
business is Board led, with new initiatives requiring an objective risk assessment and opinion prior to approval.
Syndicate 1925 has a different risk profile to Lloyd’s market competitors, specialising in providing cyber reinsurance
only. This means that there are very few comparable market or industry competitors. Several of the risks written are
genuinely new to the Lloyd’s market. Envelop
, through Syndicate 1925, are considered a leader in developing risk
solutions for cedents in the primary cyber market. Their proprietary technology and data-analytics capabilities are a
unique differentiator enabling a market leading approach to the selection and pricing of cyber exposure.
Strategic risk is the risk that inadequate, ineffective, or inappropriate business decisions result in negative impacts
on the ability to execute the
syndicate’s
business objectives/strategy, and hence on the profitability of the syndicate.
The ASML Board has ultimate responsibility for overseeing the execution of the approved strategy and consequently
the associated strategic risk. All areas of the business are encouraged to identify areas of potential uncertainty that
could impact plan execution and to identify emerging risks.
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. It comprises premium risk and reserving risk. The ASML Underwriting Committee
oversees the management of premium risk and the implementation of a disciplined Underwriting Strategy with a
robust control and governance framework that is focused on writing quality business at an acceptable price, and
the purchase of a comprehensive outwards reinsurance programme. The ASML
Board sets limits to the syndicate’s
exposure to underwriting risk and accumulation events both on a gross and net of reinsurance basis and adherence
to these limits is reported monthly to the ASML Underwriting Committee. The ASML Reserving Committee oversees
the overall management of reserving risk. Reserving risk is managed through the use of proprietary and
standardised modelling techniques, internal and external benchmarking, review of claims development and the
ongoing oversight from an independent external reserving process. An independent Statement of Actuarial Opinion
is commissioned each year in line with Lloyd’s Valuation of Liabilities requirements. The reserving process is
overseen by and reports through the ASML Audit Committee.
Regulatory risk is financial loss or inability to conduct normal business activities owing to a breach of regulatory
requirements or failure to respond to regulatory change. ASML is a regulated entity and therefore is required to
comply with the requiremen
ts of the PRA, FCA and Lloyd’s. Lloyd’s requirements include those imposed on the
Lloyd’s market by overseas regulators. ASML ensures that there is an appropriate level of skilled resources in place
to meet its regulatory obligations, including compliance, risk management and internal audit functions.
A group has been formed to review ‘contentious risks’ comprising
ASML’s
Chief Underwriting Officer, Chief Risk
Officer, Chief Reinsurance Officer, Chief Engagement Officer and Senior Sustainability Analyst. This group reviews
risks that are presented to underwriters, which, while not explicitly excluded by ASML’s policies, could lead to
an
adverse reputational impact for ASML. Before the underwriter can proceed, approval must be granted by at least
three members of this contentious risks group.
Syndicate 1925
Report of the directors of the managing agent
6
All of the contentious risks, and the reasonings for approval or denial, are maintained on a contentious risk log to
help develop learning and ensure consistency of approach. This log is reviewed quarterly by the ASML
Environmental, Social, and Governance
(“
ESG
”)
Committee, and if they identify any inconsistencies, they revert to
the contentious risks group or, as appropriate, escalate to the ASML Board Risk Committee or to the ASML Board.
The contentious risk process is also used to consider instances where a risk might be excluded by existing appetites
but could have a significant social benefit, allowing the team to approve on that basis.
Operational risk is the risk of a loss resulting from inadequate or failed internal processes, people and systems or
from external events. The syndicate is constantly exposed to operational risk as this covers the uncertainties and
hazards of undertaking day-to-day business. Controls have been put in place and documented to try to ensure that
these risks are managed on a proportionate basis and within risk appetite. As operational risks apply across the
entire business, all committees have some level of oversight for operational risk. However, the ASML Operations
and Change Committee manage risks relating to changes in systems and processes, and the ASML Board Risk
Committee has oversight of any risk events which require escalation.
Financial risk for the syndicate covers all risks related to financial investment and the ability to pay creditors, and
includes credit risk, liquidity risk and market risk. In relation to assets held, an investment mandate reflecting the
syndicate’s risk
appetite is in place and has been approved by the ASML Board. Compliance with this is controlled
through the investment manager’s systems and monitored through the
ASML Investment and Treasury Oversight
Group.
Credit risk is the risk of financial loss to the syndicate if a counterparty to a financial instrument or a reinsurance
agreement fails to discharge a contractual obligation. ASML manages credit risk by placing limits on exposure to a
single counterparty by reference to the credit rating of the counterparty. On a quarterly basis the ASML Finance
Committee reviews credit exposures, reinsurer security and counterparty limits, with further oversight provided by
the ASML Board and Audit Committee.
Liquidity risk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due, or that they can only be met by incurring additional costs. ASML’s
approach to managing liquidity risk includes use of daily liquidity monitoring, quarterly cash flow forecasts and
management of asset duration. Contingency funding plans are in place to ensure that adequate liquid financial
resources are available to meet obligations as they fall due in the event of reasonably foreseeable abnormal
circumstances.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. Market risk comprises three key components: interest rate risk, currency risk and investment risk. For each of
the major components of market risk the syndicate has policies and procedures in place which detail how each risk
should be managed and monitored. Investment management is outsourced and an investment mandate reflecting
the syndicate’s risk appetite is in place and has been approved by the
ASML Board. Compliance with this is
controlled through the investment manager’s systems and monitored through the monthly and quarterly reporting
process.
The use of financial derivatives is governed by ASML’s risk management policies and ASML does not use such
instruments for speculative purposes. The ASML Board has agreed key risk indicators and approved the
corresponding risk appetite for each measure.
A quantitative analysis of the risks set out above is included in note 4 to the annual accounts. A traffic light indicator
is used for monitoring current levels of risk based upon agreed thresholds and tolerances.
Emerging risks
An emerging risk is defined as a risk that is new, unforeseen, or unfamiliar. It may result from new or increased
exposure that could pose both as an opportunity or threat to the existing business risk appetite or tolerance.
The Emerging Risk Working Group is a cross-agency forum, that enables a diverse set of practitioners to review
thematic risk considerations. The results of these reviews can lead to further deep dive assessments that in turn
are reported through the governance structures to the ASML Board Risk Committee. Examples of deep dive reviews
conducted during 2024 include:
Syndicate 1925
Report of the directors of the managing agent
7
Tech accelerations
The pace and acceleration of technological achievement across computer science, medicine and agriculture has
all been driven by the need to innovate, create efficiency and resilience in response to global challenges. The speed
of the change can present challenges when considering how to write and price new/evolving risk exposures.
Information bias
ASML relies on the accuracy of data/information in order to make appropriate risk based decisions. Information bias
focusses on how it is possible to identify and account for a number of different types of bias within the data and
information used. These include cognitive bias, data collection bias and media (social) influences. This could result
in inaccurate decisions being made due to bias anchoring etc. resulting in incorrect pricing being applied.
Artificial I
ntelligence (“AI”)
The ease of access to generative AI and large language models has brought this technology risk and opportunity
to greater social and commercial awareness. ASML’s position is to maintain an appropriately cautious approach to
managing the risks associated with data privacy and security, whilst also enabling staff to innovate with business
processes and analysis where this can add commercial value.
ASML has implemented several controls in appropriate use of AI within the business. This will continue to be
reviewed and developed as ASML develops a better understanding of how to utilise this in the future.
Corporate governance
The ASML Board is chaired by Angus Winther, who is supported by five further non-executive directors and all
except Stuart Davies are independent. Monica Cramér Manhem was appointed as Non-Executive Director on 6
June 2024. Martin Hudson stepped down on 28 February 2025. Rob Littlemore was appointed as a Non-Executive
Director on 28 February 2025, subject to regulatory notifications. David Ibeson is the Chief Executive Officer and
there were three further executive directors as at 31 December 2024. With effect from 1 January 2024, Taryn
McHarg, the Apollo Chief Financial Officer, was appointed as an executive director and James MacDiarmid, Hayley
Spink and Simon White stepped down from the ASML Board, remaining on the Executive Committee of ASML.
With effect from 1 January 2024, Chris Baddeley was appointed as Active Underwriter of the syndicate.
Defined operational and management structures are in place and terms of reference exist for the ASML Board and
all Board and Management Committees.
The ASML Board meets at least four times a year and more frequently when business needs require. The ASML
Board has a schedule of matters reserved for its decision and is supported by the Audit Committee, the Risk
Committee and the Remuneration and Nominations Committee. These supporting committees are comprised of
non-executive directors and with the exception of Stuart Davies, all members of the Audit Committee are
independent. All members of the Risk Committee and Remuneration and Nominations Committee are independent.
Section 172 statement
The directors adopt the responsibilities to promote the success of the syndicate as if s172 of the Companies Act
2006 were applicable and have acted in accordance with these responsibilities during the year. The ASML Board
has identified the following key stakeholders: capital providers to the managed syndicates, employees, the
shareholder of ASML, Lloyd’s
, regulators, policyholders and brokers.
Throughout the year the ASML Board considered the wider impact of strategic and operational decisions on its
stakeholders. Examples include the development and execution of the business plans for the syndicate; the
assessment and raising of capital; communications with capital providers; and changes to Board composition. The
ASML Board considers that the interests of all stakeholders were aligned for these decisions.
The support and engagement of capital providers of the syndicate is imperative to the future success of our
business. There are regular meetings with capital providers and members’ agents throughout the year to discuss
the performance and future prospects for the syndicate. Feedback received during these meetings enables the
ASML Board to factor the views of these key stakeholders into the development of business plans for future years.
Syndicate 1925
Report of the directors of the managing agent
8
Developing and maintaining relationships with brokers and policyholders is central to the success of the syndicate.
Underwriters travel widely with our broking partners to visit clients and attend industry events to promote the
syndicates and the Lloyd’s b
rand and to ensure we continue to provide an excellent service to our policyholders. In
developing insurance propositions, marketing them with our broking partners, and in settling claims, we always seek
to ensure fair customer outcomes and provide products that deliver value.
ASML maintains
open and transparent relationships with our regulators and Lloyd’s,
with these relationships being
managed through our compliance team. Regular meetings are held with representatives of Lloyd’s and the PRA
and significant regulatory engagements are reported to the ASML Board.
Apollo’s
stated p
urpose is “Enabling a resilient and sustainable world”. Through 202
4 we continued our work to
develop and document our ESG principles and standards and assess our current business model against these
standards. There is a defined referral process for underwriting risks to adhere to our ESG appetite and manage
potential reputational risk. ESG considerations are integrated into the design of the investment strategy and asset
allocation, and ongoing attention is given to staff engagement, particularly around Diversity, Equity & Inclusion
(‘’DEI’’)
. Further work on ESG activities will continue through 2025.
We have put in place arrangements to assist in managing the financial risks and opportunities associated with the
effects of climate change and to ensure adequate oversight and control of this area in relation to underwriting,
reserving, investment management and operations. The business meets the requirements for PRA Supervisory
Statement 3/19. Whilst the Chief Risk Officer retains overall accountability for coordinating the approach to
managing this risk within ASML, the responsibility is allocated to relevant managers of each business area. Further
developments to ensure appropriate management of these risks and opportunities will continue through 2025.
Staff matters
We believe that our people are our most valuable asset. Attracting, retaining, and nurturing talent is essential to our
success. We are committed to creating a work environment where employees feel engaged through communication,
acknowledgment and ongoing growth opportunities. We actively support and promote DEI as well as mental health
and wellbeing to ensure that all staff members feel appreciated, supported and can perform at their best.
We aspire to function as a team where respect and collaboration are standard practices. Our hybrid working aims
to empower employees and to encourage a culture of communication and cooperation. We have channels for staff
to express concerns and to share feedback making our workplace safe, encouraging and innovative.
ASML’s people practices remain highly competitive in the London
insurance market, providing compensation,
benefits, and terms designed to attract and retain top talent. A key focus is on ensuring our employees perform at
their best with opportunities for skill enhancement, to develop their capabilities and advance their careers within
ASML. This is an integral focus of our succession planning strategy.
Business operations
ASML aims to maintain a lean, efficient operating model utilising technology and outsourcing arrangements enabling
flexibility and scalability to meet the demands of the business. We continue to invest in resources across the
business in order to ensure that there is an effective operating model and robust three lines of defence model.
Lloyd’s B
lueprint Two initiatives will offer several processing efficiency gains for the market, and we believe we are
well positioned to adopt the new digital services to maximise the benefit to ASML, its syndicates and its capital
providers.
ASML continues to successfully maintain a hybrid working environment with all employees able to work effectively,
both remotely and from the office, with suitable access to business systems.
Aligned with the FCA
’s
and PRA
’s
Operational Resilience and Third-Party Oversight policies, Apollo maintains a
disciplined approach to operational resilience. We continue to focus on ensuring we maintain robust and resilient
plans to prevent, respond and recover from operational disruptions with the primary objective to protect our
customers and the integrity of our business.
Syndicate 1925
Report of the directors of the managing agent
9
Environmental, Social and Governance
ASML
’s
Board-approved ESG strategy was reviewed in November 2024. The ASML Board drives the strategy,
which is aligned with our vision statement and purpose,
“Enabling a resilient and sustainable world”.
ASML’s ESG Committee reports directly to the Executive Committee and coordinates ESG
-related activities within
ASML.
The ESG Committee’s mandate is set out within ASML’s ESG Policy, but at a high
-level seeks to identify
areas of improvement and to ensure progress against the ESG strategy as approved by the ASML Board.
ASML is committed to a long-term sustainable approach to protecting the environment, balancing environmental
considerations and social
responsibility with our overall business goals. ASML’s underwriting and investment
practices are governed by ESG risk appetites that were originally implemented in 2022 and are reviewed at least
annually. ASML is also working to identify new opportunities that support the transition to a low carbon sustainable
economy, including through Lloyd’s new Transition TCX class.
The ESG strategy is reviewed by the ASML Board annually. During 2024, ASML’s key achievements have included:
•
integrating climate risk formally into the ERM and governance frameworks which included enhancements
to climate related stress and scenario testing,
•
implementing new investment guidelines to avoid investing in sectors that do not align with the ESG risk
appetites,
•
joining the Partnership for Carbon Accounting Financials and commencing
work to baseline ASML’s
insurance-associated emissions, and
•
e
nhancing ASML’s approach to managing ESG risks in the underwriting process.
At Apollo our people are at the heart of everything we do. We operate a zero-tolerance policy to bullying,
harassment, and discrimination. This includes protected characteristics under the Equality Act of 2010, as well as
neurodiversity, parental and caring responsibilities, socio-economic status, and working patterns.
ASML is dedicated to fostering a diverse, equitable, and inclusive workplace, with a focus on inclusive hiring
practices. We are proud sponsors and supporters of six Lloyd’s market inclusion networks. As such, we have
implemented several inclusion initiatives and have a comprehensive DEI strategy in place. Employees have access
to mental health and wellbeing resources through independent partners, as well as additional support through
private medical services.
ASML monitors gender and racial diversity metrics, employee satisfaction, and governance related metrics. This
information is used by the ASML Board to track progress against the ESG Strategy. Several DEI related metrics at
year-end 2024 are summarised below.
2024
Total number
Proportion of total
category
(all employees,
senior managers,
board)
Employees that are women
109
39%
Senior managers that are women
14
28%
Board directors that are women
4
27%
Employees that are from ethnic minorities
45
14%
Senior managers that are from ethnic minorities
3
3%
Board directors that are from ethnic minorities
2
18%
Notes: At the end of 2024, ASML had 281 employees in total, of which 45 were senior managers. There were 10 board directors.
Syndicate 1925
Report of the directors of the managing agent
10
From an environmental perspective, Apollo Group
’s carbon footprint is monitored across different types of emissions
sources and we have separately aligned with greenhouse gas emissions (“GHG”) protocol scopes 1 and 2 and
several scope 3 categories (which cover purchased goods and services, fuel and energy-related activities, waste
generated in operations, employee commuting, and upstream leased assets). GHG emissions currently exclude
our scope 3 underwriting emissions as we look to develop an appropriate methodology. Our Scope 1 and 2 GHG
emissions are reported to UK Companies House under the Streamline Energy and Carbon Reporting framework.
Apollo Group scope 1, 2, and 3 GHG emissions for year-end 2024 are disaggregated by source below.
2024
Emissions source
Kg CO
₂
Proportion of total
Scope 1
Heating
31,459
4.9%
Personal mileage
4,116
0.6%
35,575
5.5%
Scope 2
Electricity
53,979
8.4%
53,979
8.4%
Scope 3
Business travel/commuting
496,712
76.9%
Office materials/waste
40,364
6.3%
Fuel-related activities
18,987
2.9%
556,063
86.1%
Total
100%
Directors
The directors who held office at the date of signing this report are shown on page 2.
Annual general meeting
The directors do not propose to hold an annual general m
eeting for the syndicate. If any members’ agent or direct
corporate supporter of the syndicate wishes to meet with them the directors are happy to do so.
Disclosure of information to the auditor
Each person who is a director of the managing agent at the date of approving this report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the syndicate's auditor is unaware;
and
•
each director has taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the syndicate's auditor is aware of that information.
Auditor
Deloitte LLP has indicated its willingness to continue in office as the syndicate’s auditor.
The managing agent hereby
gives formal notification of a proposal to re-appoint Deloitte LLP as auditor of Syndicate 1925 for a further year.
Events after the balance sheet date
The ASML Board has considered events after the balance sheet date which, by their nature, are material to the
syndicate and no items have been identified for disclosure.
Future developments
The syndicate will continue to grow the Cyber Reinsurance account writing under the Apollo brand. Additional
revenue will be sought through new business opportunities and increased lines on existing programmes.
There are expected to be operating efficiencies through the establishment of new Apollo business initiatives which
share the Apollo resources.
The syndicate will continue to receive an allocation of the Syndicate 1971 investment income and this will increase
as the balance sheet grows.
Syndicate 1925
Report of the directors of the managing agent
11
The syndicate has received positive support from capital providers. A strong, diversified and knowledgeable spread
capital base gives significant competitive advantage and maintaining this will remain a focus.
I would like to take this opportunity to thank our staff for their hard work and commitment to the business during the
last year.
Approved by the Board.
DCB Ibeson
Chief Executive Officer
5 March 2025
Syndicate 1925
Statement of managing agent’s responsibilities
12
The Managing Agent is responsible for preparing the syndicate annual accounts in accordance with applicable law
and regulations.
The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 require the
managing agent to prepare syndicate annual accounts as at 31 December each year in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The
syndicate annual accounts are required by law to give a true and fair view of the state of affairs of the syndicate as
at that date and of its profit or loss for that year.
In preparing the syndicate annual accounts, the managing agent is required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the notes to the syndicate annual accounts; and
•
prepare the syndicate annual accounts on the basis that the syndicate will continue to write future business
unless it is inappropriate to presume that the syndicate will do so.
The Managing Agent is responsible for the preparation and review of the iXBRL tagging that has been applied to
the Syndicate Accounts in accordance with the instructions issued by Lloyd’s, including designing, implementing,
and maintaining systems, processes and internal controls to result in tagging that is free from material non-
compliance with the instructions issued by Lloyd’s, whether due to fraud or error.
The Managing Agent is responsible for keeping proper accounting records which disclose with reasonable accuracy
at any time the financial position of the syndicate and enable it to ensure that the syndicate annual accounts comply
with the 2008 Regulations. It is also responsible for safeguarding the assets of the syndicate and hence for taking
reasonable steps for prevention and detection of fraud and other irregularities.
Legislation in the UK governing the preparation and dissemination of annual accounts may differ from legislation in
other jurisdictions.
Syndicate 1925
Independent auditor’s report to the members of Syndicate
1925
13
Report on the audit of the syndicate annual financial statements
Opinion
In our opinion the syndicate annual financial
statements of Syndicate 1925 (the ‘syndicate’):
•
give a true and fair view of the state of the syndicate’s affairs as at 31 December 2024 and of its profit for
the year then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice,
including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”; and
•
have been prepared in accordance with the requirements of The Insurance Accounts Directive (Lloyd’s
Syndicate and Aggregate Accounts) Regulations 2008 and sections 1 and 5 of the Syndicate Accounts
Instructions Version 2.0
as modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’s (the
“Lloyd’s Syndicate Accounts Instructions”).
We have audited the syndicate annual financial statements which comprise:
•
the profit and loss account;
•
the statement of changes in members’ balances;
•
the balance sheet;
•
the statement of cash flows; and
•
the notes to the annual accounts 1 to 18.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable
in the UK and Republic of Irelan
d” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), applicable law
and the Syndicate Accounts Instructions. Our responsibilities under those standards are further described in the
auditor's responsibilities for the audit of the syndicate annual financial statements section of our report.
We are independent of the syndicate in accordance with the ethical requirements that are relevant to our audit of
the syndicate annual financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the managing agent’s use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the syndicate’s ability to continue in
operations for a period of at least twelve months from when the syndicate financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the managing agent with respect to going concern are described in
the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report and Accounts (the “annual report”),
other than the syndicate annual financial statements and our auditor’s report thereon. The managing agent is
responsible for the other information contained within the annual report. Our opinion on the syndicate annual
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Syndicate 1925
Independent auditor’s report to the members of Syndicate
1925
14
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the syndicate annual financial statements or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of managing agent
As explained more fully in the managing agent’s responsibilities statement, the managing agent is responsible for
the preparation of the syndicate annual financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the managing agent determines is necessary to enable the preparation of
syndicate annual financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the syndicate annual financial statements, the managing agent is responsible for assessing the
syndicate’s ability to continue in operation, disclosing, as applicable, matters related to the syndicate’s ability to
continue in operation and to use the going concern basis of accounting unless the managing agent intends to cease
the syndicate’s operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the syndicate annual financial statements
Our objectives are to obtain reasonable assurance about whether the syndicate annual financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these syndicate annual financial
statements.
A further description of our responsibilities for the audit of the syndicate annual financial statements is located on
the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the syndicate and its control environment, and reviewed the syndicate’s documentation
of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of
management about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory frameworks that the syndicate operates in, and identified
the key laws and regulations that:
•
had a direct effect on the determination of material amounts and disclosures in the financial statements. These
included the Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and
the Lloyd’s Syndicate Accounting Byelaw (no. 8 of 2005), the Lloyd’s Syndicate Accounts Instructions; and
•
do not have a direct effect on the financial statements but compliance with which may be fundamental to the
syndicate’s ability to operate or to avoid a material penalty. These included the requirements of Solvency II.
We discussed among the audit engagement team including actuarial specialists and IT specialists regarding the
opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur
in the financial statements.
Syndicate 1925
Independent auditor’s report to the members of Syndicate
1925
15
As a result of performing the above, we identified the greatest potential for fraud in the following areas, and our
procedures performed to address them are described below:
•
estimation of pipeline premiums requires significant management judgement and therefore is susceptible to
management bias through manipulation of core assumptions. Our testing included comparing management’s
estimated premium income to supporting documentation on a sample basis and performing substantive
analytical procedures. We reviewed the progression of actual premium signings for the 2024 year of account
to check that the conversion of estimated premium to actual signed premium was as expected at this stage of
the syndicate’s lifecycle and using premium written by the host syndicate for the 2023 YoA as a guide, to give
further assurance over the accuracy of management’s premium estimation.
•
valuation of technical provisions, and specifically IBNR, includes assumptions and methodology requiring
significant management judgement and involves complex calculations, and therefore there is potential for
management bias. There is also a risk of overriding controls by making late adjustments to the technical
provisions. In response to these risks, we performed a detailed risk assessment and involved our actuarial
specialists to make detailed assessments of the methodologies and assumptions used. We tested the late
journal entries to technical provisions.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the
risk of management override. In addressing the risk of fraud through management override of controls, we tested
the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making
accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant
transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
•
reviewing financial statement disclosures by testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
•
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
•
enquiring of management, concerning actual and potential litigation and claims, and instances of non-
compliance with laws and regulations; and
•
reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with Lloyd’s.
Report on other legal and regulatory requirements
Opinions on other
matters prescribed by The Insurance Accounts Directive (Lloyd’s Syndicate and
Aggregate Accounts) Regulations 2008
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the managing agent’s report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
•
the managing agent’s report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the syndicate and its environment obtained in the course of the
audit, we have not identified any material misstatements in the managing agent’s report.
Matters on which we are required to report by exception
Under The Insurance Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 we are
required to report in respect of the following matters if, in our opinion:
•
the managing agent in respect of the syndicate has not kept adequate accounting records; or
•
the syndicate annual financial statements are not in agreement with the accounting records; or
•
we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
Syndicate 1925
Independent auditor’s report to the members of Syndicate
1925
16
Use of our report
This report is made
solely to the syndicate’s members, as a body, in accordance with regulation 10 of The Insurance
Accounts Directive (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008. Our audit work has been
undertaken so that we might state to the syndicate’s mem
bers those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the syndicate’s members as a body, for our audit wor
k, for this report, or for the
opinions we have formed.
As required by the Syndicate Accounts Instructions Version 2.0, these financial statements will form part of the
Electronic Format Annual Syndicate Accounts filed with the Council of Lloyd’s and published on the Lloyd’s website.
This auditors’ report provi
des no assurance over whether the Electronic Format Annual Syndicate Accounts have
been prepared in compliance with Section 2 of the Syndicate Accounts Instructions Version 2. We have been
engaged to provide assurance on whether the Electronic Format Annual Syndicate Accounts has been prepared in
compliance with Section 2 of the Syndicate Accounts Instructions Version 2 and will privately report to the directors
of the managing agent and the Council of Lloyd’s on this.
Kirstie Hanley (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
5 March 2025
Syndicate 1925
Profit and loss account
For the year ended 31 December 2024
17
2024
Technical account
–
general business
Note
$’000
Gross premiums written
5
Outwards reinsurance premiums
(19,934 )
Premiums written, net of reinsurance
Change in the provision for unearned premiums:
Gross amount
13
(15,854 )
Reinsurers’ share
13
Net change in provisions for unearned premiums
(7,061 )
Earned premiums, net of reinsurance
Allocated investment return transferred from the non-technical
account
9
Claims paid
Gross amount
13
(2 )
Reinsurers’ share
13
Net claims paid
(2 )
Change in the provision for claims
Gross amount
13
(12,992 )
Reinsurers’ share
13
Net change in provision for claims
(8,462 )
Claims incurred, net of reinsurance
(8,464 )
Net operating expenses
6
(5,391 )
Balance on the technical account - general business
All operations relate to continuing activities.
The accompanying notes on pages 21 to 39 form an integral part of these annual accounts.
Syndicate 1925
Profit and loss account
For the year ended 31 December 2024
18
2024
Non-technical account
Note
$’000
Balance on the technical account - general business
Investment income
9
Total investment return
Allocated investment return transferred to the technical account - general
business
(50 )
Loss on foreign exchange
(36 )
Profit for the financial year
There were no amounts recognised in other comprehensive income in the current year other than those included in
the profit and loss account.
Statement of changes in members’ balances
For the year ended 31 December 2024
2024
$’000
Members’ balances brought forward at 1 January
Profit for the financial year
Members’ agents’ fees
(54 )
Members’ balances carried forward at 31 December
Members participate on syndicates by reference to years of account and their ultimate result, assets and liabilities
are assessed with reference to policies incepting in that year of account in respect of their membership of a particular
year.
Syndicate 1925
Balance sheet
As at 31 December 2024
19
2024
Assets
Note
$’000
Reinsurers’ share of technical provisions
Provision for unearned premium
13
Claims outstanding
13
Debtors
Other debtors
10
Prepayments and accrued income
Deferred acquisition costs
11
Total assets
2024
Liabilities, capital and reserves
Note
$’000
Capital and reserves
Members’ balances
Total capital and reserves
Technical provisions
Provision for unearned premium
13
Claims outstanding
13
Accruals and deferred income
14
Total liabilities
Total liabilities, capital and reserves
The syndicate annual accounts on pages 17 to 39 were approved by the Board of Apollo Syndicate Management
Limited and were signed on its behalf by:
TL McHarg
Chief Financial Officer
5 March 2025
Syndicate 1925
Statement of cash flows
For the year ended 31 December 2024
20
2024
$’000
Cash flows from operating activities
Profit for the financial year
Adjustments for:
Increase in gross technical provisions
Increase in reinsurers' share of technical provisions
(13,274 )
Increase in debtors
(13,453 )
Movement in other assets/liabilities
(2,622 )
Investment return
(50 )
Net cash flows from operating activities
Cash flows from investing activities
Investment income received
Net cash flows from investing activities
Cash flows from financing activities
Other
(54 )
Net cash flows from financing activities
(54 )
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
As a SPA syndicate all cash receipts and payments are undertaken by the host Syndicate 1971. The cash flow
reflects the movement of line-by-line elements of Syndicate 1971 ceded to the syndicate except for the cash balance
itself which is reflected as the movement in the debtor due from Syndicate 1971.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
21
1. Basis of preparation
Syndicate 1925 comprises a group of members of the Society of Lloyd
’
s that underwrites insurance business in the
London Market.
The address of the syndicate’s managing agent, Apollo
Syndicate Management Limited, is One
Bishopsgate, London EC2N 3AQ.
The annual accounts have been prepared in accordance with The Insurance Accounts Directive (Lloyd’s Syndicate
and Aggregate Accounts) Regulations 2008 and applicable accounting standards in the United Kingdom and the
Republic of Ireland, including Financial Reporting Standard 102
(“
FRS 102
”)
and Financial Reporting Standard 103
(“
FRS 103
”)
in relation to insurance contracts, and the Lloyd’s Syndicate Accounts Instructions Version 2.0 as
modified by the Frequently Asked Questions Version 1.1 issued by Lloyd’
s.
The annual accounts have been prepared on the historical cost basis, except for financial assets which are
measured at fair value through profit or loss.
The annual accounts are presented in US Dollars, which is also the s
yndicate’s functional currency
.
All amounts have been rounded to the nearest thousand and are stated in US Dollars unless otherwise indicated.
Going concern
The syndicate has financial resources to meet its financial needs and manage its portfolio of insurance risk. The
directors have continued to review the business plans, liquidity and operational resilience of the syndicate and are
satisfied that the syndicate is well positioned to manage its business risks in the current economic environment.
The syndicate 2025 year of account has opened, and the directors have concluded that the syndicate has a
reasonable expectation that it will open a 2026 year of account. The syndicate has sufficient capital for each year
of account provided by the syndicate members as FAL. There is no intention to cease underwriting or cease the
operations of the syndicate.
Accordingly, the directors of the managing agent continue to adopt the going concern basis in preparing the annual
accounts.
2. Critical accounting judgements and key sources of estimation uncertainty
In preparing these annual accounts, the directors of the managing agent have made judgements, estimates and
assumptions that affect the application of the syndicate’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Several of the estimates are based on actuarial assumptions underpinned by
historical experience, market data, and other factors that are considered to be relevant.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised in the period in which they are identified where the revision affects
only that period, and in future periods where the revision affects both current and future periods.
Critical judgements in applying the syndicate’s accounting policies
There are no critical judgements, apart from those involving estimations (which are dealt with separately below), in
the process of applying the syndicate’s accounting policies.
Key sources of estimation uncertainty
The key assumptions and other key sources of estimation uncertainty at the balance sheet date that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year relate principally to gross written premium and claims outstanding, in particular the provision for claims
that have been incurred at the reporting date but have not yet been reported and the accrual for pipeline premium
respectively.
Gross written premium
Gross written premium comprises contractual amounts, underwriter estimates at a policy level reflecting guidance
provided by clients and cover holders and actuarial pipeline premium estimates. These include amounts due to the
syndicate not yet received or notified at a portfolio level based on historical experience.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
22
2.
Critical accounting judgements and key sources of estimation uncertainty (continued)
The gross written premium payable on a policy is often variable, dependent on the volume of trading undertaken by
the insured during a coverage period. Estimates of such additional premiums are included in premiums written but
may have to be adjusted if economic conditions or other underlying trading factors differ from those expected. Gross
premiums written are disclosed in note 5.
Claims outstanding
The measurement of the provision for claims outstanding and the related reinsurance recoveries requires
assumptions to be made about the future that have a significant effect on the amounts recognised in the annual
accounts.
The provision for claims outstanding comprises the estimated cost of settling all claims incurred but unpaid at the
balance sheet date and includes IBNR and a confidence margin. This is a complex area due to the subjectivity
inherent in estimating the impact of claims events that have occurred but for which the eventual outcome remains
uncertain. The estimate of IBNR is generally subject to a greater degree of uncertainty than that for reported claims.
The amount included in respect of IBNR is based on statistical techniques of estimation applied by the managing
agent’s in
-house actuaries. These techniques normally involve projecting based on past experience the
development of claims over time, as adjusted for expected inflation, to form a view of the likely ultimate claims to
be expected and, for more recent underwriting years, the use of industry benchmarks and initial expected loss ratios
from business plans. The syndicate writes a class of business for which there is limited prior experience and
considerable use is made of information obtained in the course of pricing individual risks accepted and experience
of analogous business. Account is taken of variations in business accepted and the underlying terms and conditions.
The provision for claims also includes amounts in respect of internal and external claims handling costs.
Accordingly, the most critical assumptions as regards to claims provisions are that the past is a reasonable indicator
of the likely level of claims development, that the notified claims estimates are reasonable and that the rating,
inflation and other models used for current business are based on fair reflections of the likely level of ultimate claims
to be incurred. The level of uncertainty with regard to the estimations within these provisions generally decreases
with the length of time elapsed since the underlying contracts were on risk.
The reserve setting process is integrated into Apollo’s governance framework. The proposed best
estimate reserves
are reviewed in detail by the Reserving Committee on a quarterly basis and specific management margin added to
increase the probability that the reserves are sufficient to meet liabilities so far as they can reasonably be foreseen.
These reserves, including margins, are then subject to further review by the Audit Committee on behalf of the Board.
The directors consider that the provisions for gross claims and related reinsurance recoveries are fairly stated on
the basis of the information currently available. The ultimate liability will vary as a result of subsequent information
and events, which may result in significant adjustments to the amounts provided. The estimate of the provision for
claims outstanding will develop over time and the estimated claims expense will continue to change until all the
claims are paid.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
23
3.
Significant accounting policies
The following significant accounting policies have been applied consistently in accounting for items which are
considered material in relation to the syndicate’s annual accounts.
Gross premiums written
Gross premiums written comprise premiums on contracts of insurance incepted during the financial year. Additional
or return premiums are treated as a re-measurement of the initial premium. Estimates are made for pipeline
premiums, representing amounts due to the syndicate not yet received or notified.
Premiums are shown gross of brokerage payable and are exclusive of taxes and duties thereon.
Outwards reinsurance premiums
Written outwards reinsurance premiums comprise the estimated premiums payable for contracts entered into during
the period. Non-proportional reinsurance contracts are recognised on the date on which the policy incepts, and
proportional reinsurance is recognised when the underlying gross premium is written.
The reported outwards reinsurance premiums include adjustments for variations in cover relating to contracts
incepting in prior accounting periods.
Under some policies, reinsurance premiums payable are adjusted retrospectively in the light of claims experience.
Where written premiums are subject to an increase retrospectively, any potential increase is recognised as soon as
there is an obligation to the reinsurer.
Provisions for unearned premiums
Written premiums are recognised as earned over the life of the policy. Unearned premiums represent the proportion
of premiums written that relate to unexpired terms of policies in force at the balance sheet date, calculated on the
basis of earnings patterns reflecting the risk profile of the underlying policies or time apportionment as appropriate.
Outwards reinsurance premiums are earned in the same accounting period as the premiums for the related direct
or inwards business being reinsured.
Claims provisions and related reinsurance recoveries
Gross claims incurred comprise the estimated cost of all claims occurring during the year, whether reported or not,
including related direct and indirect claims handling costs and adjustments to claims outstanding from previous
years.
Incurred claims outstanding are reduced by anticipated salvage and other recoveries from third parties. The amount
of any salvage and subrogation recoveries is separately identified and, where material, reported as a receivable.
The provision for claims outstanding is assessed on an individual case by case basis and is based on the estimated
ultimate cost of all claims notified but not settled by the balance sheet date, together with the provision for related
claims handling costs. The provision also includes the estimated cost of IBNR claims as well as claims incurred but
not enough reported (“IBNER”) and a confidence margin above best estimate.
The reinsurers’ share of provisions for claims is based on amounts of claims outstanding and projections for IBNR,
net of estimated irrecoverable amounts, having regard to the reinsurance programme in place for the class of
business, the claims experience for the year and the current security rating of the reinsurance companies involved.
Where the security rating provides an indication that the recoverable amount may be impaired a proportion of the
balance will be provided for as a provision for bad debt by applying a percentage based on historical experience.
Unexpired risks provision
A provision for unexpired risks is made where claims and related expenses likely to arise after the end of the financial
period in respect of contracts concluded before that date are expected, in the normal course of events, to exceed
the unearned premiums and premiums receivable under these contracts after the deduction of any acquisition costs
deferred.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
24
3.
Significant accounting policies (continued)
A provision for unexpired risks is calculated separately by reference to classes of business which are regarded as
managed together after taking into account relevant investment return. All the classes of the syndicate are
considered to be managed together.
Debtors and creditors
Debtors and creditors are recognised when due. These include amounts due to and from the host syndicate which
are classified as debtors and creditors as they are non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market. Debtors are measured at amortised cost less any provision for
impairments. Creditors are stated at amortised cost less any provision for impairments.
Off-setting
Financial assets and financial liabilities are off-set, and the net amount presented in the balance sheet when, and
only when, the syndicate has a legal right to set off the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Investment return
Investment return is comprised of interest earned on the funds withheld balance. Interest is calculated based on the
balance on the experience account, held by Syndicate 1971 on behalf of the syndicate. Interest on each currency
is credited at the same yield earned by Syndicate 1971 in the period.
Investment return is initially recorded in the non-technical account and subsequently transferred to the technical
account to reflect the investment return on funds supporting the underwriting business.
Net operating expenses
Net operating expenses include acquisition costs, administrative expenses and members
’ standard personal
expenses. Operating expenses are paid by the host Syndicate 1971 and recharged to the syndicate.
Costs incurred by the managing agent on behalf of the syndicate are recognised on an accruals basis. No mark-up
is applied.
Acquisition costs
Acquisition costs represent costs arising from the conclusion of insurance contracts. They include both direct costs
such as brokerage and commission, and indirect costs such as administrative expenses connected with the
processing of proposals and the issuing of policies. Acquisition costs include fees paid to consortium leaders in
return for business written on behalf of the syndicate as a consortium member.
Acquisition costs are earned in line with the earning of the gross premiums to which they relate. The deferred
acquisition cost asset represents the proportion of acquisition costs which corresponds to the proportion of gross
premiums written that is unearned at the balance sheet date.
Reinsurers’ commissions and profit participations
Under certain outwards reinsurance contracts the syndicate receives a contribution towards the expenses incurred.
The outwards reinsurance contracts may allow the ceding of acquisition costs and in certain instances an allocation
of administrative expenses. Reinsurance arrangements can also pay an overriding or profit commission.
The reinsurers’ share of expenses is included within operating expenses and earned in line with the related expense.
The reinsurers’ share of deferred acquisition cost liability corresponds to the gross deferred acquisition costs at the
balance sheet date.
Managing agent’s fees
and profit commission
The managing agent charges a management fee of 0.9% of syndicate capacity. This expense is recognised over
the 12 months following commencement of the underwriting year to which it relates.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
25
3. Significant accounting policies (continued)
The managing agent has agreed contractual terms with the capital providers to the syndicate for the payment of
profit commission based on the performance of the individual years of account of the syndicate. Profit commission
is accrued in line with the contractual terms and the development of the result of the underlying years of account
which is reassessed regularly.
Profit commission charged to the syndicate does not become payable until after the appropriate year of account
closes, normally at 36 months, although the managing agent may receive payments on account of anticipated profit
commission if interim profits are released to members.
Foreign currencies
Transactions in foreign currencies are translated into US Dollars which is the functional and presentational currency
of the syndicate. Transactions in foreign currencies are translated using the exchange rates at the date of the
transaction. The syndicate’s monetary assets and liabilities denominated in foreign currencies are translated into
the functional currency at the rates of exchange at the balance sheet date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies
that are measured at historic cost are translated to the functional currency using the exchange rate at the date of
the transaction. For the purposes of foreign currency translation, unearned premiums and deferred acquisition costs
are treated as monetary items.
Foreign exchange differences arising on translation of foreign currency amounts are included in the non-technical
account.
Pension costs
Apollo operates a defined contribution pension scheme. Pension contributions relating to managing agency staff
working on behalf of the syndicate are charged to the syndicate and included within net operating expenses.
Taxation
Under Schedule 19 of the Finance Act 1993 managing agents are not required to deduct basic rate income tax from
trading income. In addition, all UK basic rate income tax deducted from syndicate investment income is recoverable
by managing agents and conseq
uently the distribution made to members or their members’ agents is gross of tax.
Capital appreciation falls within trading income and is also distributed gross of tax.
No provision has been made for any United States Federal Income Tax payable on underwriting results or
investment earnings. Any payments on account made by the syndicate during the year on behalf of members have
been included in the balance sheet under the heading ‘other debtors’.
No provision has been made for any other overseas tax payable by members on underwriting results.
Funds withheld
The underlying premiums and claims are settled by Syndicate 1971 with policy holders as they fall due. Within the
syndicate these are accounted for on a funds withheld basis.
Reinsurance debtors and creditors arising between the syndicate and Syndicate 1971 are not settled until the year
of account closes. Claims outstanding together with other non-technical transactions are settled when the year of
account closes, including the apportioned investment return.
Cash calls made during the period are paid to Syndicate 1971 and credited to the funds withheld balance. These
will reduce the amount due for payment to Syndicate 1971 on closure of a loss-making year.
Classification of insurance and reinsurance contracts
Insurance and reinsurance contracts are classified as insurance contracts where they transfer significant insurance
risk. If a contract does not transfer significant insurance risk it is classified as a financial instrument. All of the
syndicate
’
s written contracts and purchased reinsurance contracts transfer significant insurance risk and therefore
are classified as insurance contracts.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
26
4. Risk and capital management
Introduction and overview
This note presents information about the nature and extent of insurance and financial risks to which the syndicate
is exposed, the managing agent’s objectives, policies and processes for measuring and managing insurance and
financial risks, and for managin
g the syndicate’s
solvency capital.
The nature of the syndicate’s exposures to risk and its objectives are, due to the nature of the quota share contract
and funds withheld arrangement therein, shared with Syndicate 1971. The syndicate shares all the risks associated
with the Cyber Reinsurance business written by Syndicate 1971 including those associated with the assets and
liabilities that arise.
Enterprise Risk Management framework
The ASML ERM framework has been adopted and embedded by the syndicate. The primary objective of the ERM
framework is to protect the syndicate’s members from events that could impede sustainable growth and
achievement of consistent financial performance, including failing to maximise opportunities through informed and
appropriate risk taking. All staff providing services to the syndicate are trained to recognise the critical importance
of having efficient and effective ERM systems in place.
The ASML Board has overall responsibility for the establishment and oversight of the ERM framework. The ASML
Board has established an Audit Committee and a Board Risk Committee which oversee the operation of the
syndicate’s ERM framework and review and monitor the management of the risks to which the syndicate is exposed.
ASML has established an ERM function, together with terms of reference for the ASML Board, its committees and
the associated Executive Management Committees which identify the risk management obligations of each. The
function is supported by a clear organisational structure with documented authorities and responsibilities from the
Board t
o Executive Management Committees and senior managers using a ‘three lines of defence’ model. The
framework sets out the risk appetites for the syndicate and includes controls and business conduct standards.
Under the ERM framework, ASML’s Board Risk Committee oversees the first line ownership of risk at an executive
level. The management of specific risk grouping is delegated to several executive committees: the Underwriting
Committee and the Reserving Committee are responsible for developing and monitoring insurance risk
management policies; the management of financial risks is the responsibility of the Finance Committee and the
Investment and Treasury Oversight Group. In addition, the syndicate is exposed to consumer and operational risks
and the management of these risks is the responsibility of the Underwriting Committee and the Operations
Committee respectively. Accordingly, the executive members responsible for these risks provide the Board Risk
Committee with a first line view of the risk and the ERM function provides a second line challenge and oversight.
ASML’s
Internal Audit function provides assurance through their role as the third line of defence.
The ERM function reports quarterly to the ASML Board and Board Risk Committee on its activities and provides a
forward-looking view of the upcoming assurance activities. The Reserving Committee, Underwriting Committee,
Finance Committee, Investment and Treasury Oversight Group, Operations Committee and Change Committee
report regularly to the Executive Committee and work closely with the ERM function on their activities as well as
reporting to the Board and the relevant Board committees.
Insurance risk
Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to expectations
at the time of underwriting. It is comprised of premium risk and reserving risk and is the principal risk the syndicate
faces in the writing of insurance contracts.
Underwriting risk
Underwriting risk is the risk that the insurance premium will not be sufficient to cover future insurance losses and
associated expenses. This includes the risks that the premium is set too low, the contract provides inappropriate
levels of cover, or that the actual frequency or severity of claims events will be significantly higher than was expected
during the underwriting process.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
27
4. Risk and capital management (continued)
Reserve risk
Reserve risk is the risk that the reserves established in respect of insurance claims incurred are insufficient to settle
the claims and associated expenses in full.
Management of insurance risk
A key component of the management of insurance risk for the syndicate is a disciplined underwriting strategy that
is focused on writing quality business and not writing for premium volume. Product pricing is designed to incorporate
appropriate premiums for each type of assumed risk. The underwriting strategy includes underwriting limits on the
syndicate’s total exposure to specific risks together with limits on geographical and industry exposures to ensure
that a well-diversified book is maintained.
Contracts can contain a number of features which help to manage the insurance risk such as the use of deductibles,
or capping the maximum permitted loss, or number of claims (subject to local regulatory and legislative
requirements).
The syndicate has no exposure to natural catastrophe events.
The syndicate limits its exposure to large individual losses based on the syndicate’s risk appetite, principally through
the use of reinsurance with a panel of well-rated counterparties.
The Reserving Committee oversees the management of reserving risk. The use of proprietary and standardised
modelling techniques, internal and external benchmarking and the review of claims development are all instrumental
in mitigating reserving risk.
ASML actuaries perform a reserving analysis on a quarterly basis, liaising closely with underwriters, claims and
reinsurance personnel. The aim of this exercise is to produce a probability-weighted average of the expected future
cash outflows arising from the settlement of incurred claims and claims on unearned premium. These projections
include an analysis of claims development compared to the previous ‘best estimate’ projections.
The Reserving Committee performs a comprehensive review of the projections, both gross and net of reinsurance.
Following this review, the Reserving Committee makes recommendations to the Audit Committee and Board as to
the claims provisions to be established.
In arriving at the level of claims provisions a margin is applied over and above the actuarial best estimate to increase
the probability that the reserves are sufficient to meet liabilities.
The level of year end reserves is validated by external consulting actuaries through their report to management and
their provision of a Statement of Actuarial Opinion to ASML and Lloyd’s on gross and net reserves by year of account
at 31 December 2024.
The claims development table in note 12, shows the actual claims incurred to estimates for the year.
Sensitivity to insurance risk
The liabilities established could be significantly lower or higher than the ultimate cost of settling the claims arising.
This level of uncertainty varies between the classes of business and the nature of the risk being underwritten and
can arise from developments in case reserving for attritional losses, large losses, or from changes in estimates of
IBNR claims.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
28
4. Risk and capital management (continued)
The following table presents the sensitivity of the value of insurance liabilities disclosed in the accounts to potential
movements in the assumptions applied within the technical provisions. A five percent increase or decrease in the
ultimate cost of settling claims arising from a change in actuarial assumptions is considered reasonably possible at
the reporting date. A five percent increase or decrease in total earned claims liabilities due to a change in
assumptions would have the following effect on pro
fit or loss and members’ balances.
Sensitivity
General insurance business sensitivities
+ 5.0%
- 5.0%
2024
$’000
$’000
Claims outstanding
–
gross of reinsurance
644
(644)
Claims outstanding
–
net of reinsurance
419
(419)
On a net of reinsurance basis, the effects are more complex depending on the nature of the loss and its interaction
with other losses already incurred. The incidence of profit commission payable to intermediaries may also affect the
gross and net impact on results and members’ balance.
Financial risk
Under the funds withheld arrangement in the quota share contract with Syndicate 1971, the syndicate has exposure
to financial risk.
The financial risk faced by the syndicate is managed by ensuring that its financial assets are sufficient to fund the
obligations arising from its insurance contracts as they fall due. The primary objective of the investment
management process is to maintain capital value, which is of particular importance in volatile financial market
conditions. A secondary objective is to optimise the risk-adjusted total return whilst being constrained by capital
preservation and liquidity requirements. ASML currently implements a relatively low-risk investment policy and
Syndicate 1971 assets have been invested in short dated fixed income government and corporate bonds and money
market funds.
The investment management of a short dated fixed income bond portfolio is outsourced to a third party. An
investment mandate reflecting ASML’s risk appetite is in place and has been approved by the Board. Compliance
with this is controlled through the inve
stment manager’s systems and monitored through the monthly and quarterly
reporting process.
Credit risk
Credit risk is the risk of financial loss to the syndicate if a counterparty fails to discharge a contractual obligation.
The syndicate shares the Syndicate 1971 risk of financial loss on balances relating to the funds withheld
arrangement in respect of the following:
•
holdings in collective investment schemes;
•
short dated fixed income government and corporate bonds;
•
reinsurers’ share of insurance liabilities;
•
amounts due from intermediaries;
•
amounts due from reinsurers in respect of settled claims;
•
cash and cash equivalents; and
•
other debtors and accrued interest.
The syndicate has direct exposure to the reinsurers’ share of insurance liabilities through the common account
outwards reinsurance that is in place.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
29
4. Risk and capital management (continued)
Management of credit risk
The syndicate is exposed to the credit risk associated with the Syndicate 1971 investment portfolio of securities
which are rated BBB or above. The bond portfolio is managed to single issuer limits set by credit rating and there is
a limit to the overall exposure to BBB rated securities. ASML limits the amount of cash and cash equivalents that
can be deposited with a single counterparty and maintains an authorised list of counterparties.
ASML manages reinsurer credit risk through outwards reinsurance purchase guidelines. The guidelines place limits
on exposure to a single counterparty based on
the credit rating of the counterparty and the counterparty’s market
reputation and recent performance. The syndicate’s exposure to reinsurance counterparties is monitored by the
reinsurance team as part of their credit control processes. On a quarterly basis the Finance Committee reviews the
credit exposures to reinsurance counterparties.
ASML assesses the creditworthiness of all reinsurers by reviewing public rating information and by internal
investigations. The impact of reinsurer default is regularly assessed and managed accordingly. Where reinsurance
is transacted with unrated reinsurers, the reinsurer is required to fully collateralise its exposure through depositing
funds in trust for the syndicate.
The syndicate is exposed to intermediary debtor credit risk ceded under the quota share. ASML reviews
intermediary performance against the terms of business agreements by the compliance function. The status of
intermediary debt collection is reported to the Finance Committee.
Exposure to credit risk
All assets are due from Syndicate 1971
, which benefits from Lloyd’s credit rating from Standard and Poor’s of A
A-.
It is not practical to look through this to analyse the credit rating of the
syndicate’s share of the Syndicate 19
71
assets.
Financial assets that are past due or impaired
The syndicate does not have any directly held receivables that are past due and impaired or any other impaired
assets at the reporting date. The syndicate shares in the Syndicate 1971 risk associated with debtors arising from
direct insurance and reinsurance operations that are past due but not impaired at the reporting date. These debtors
have been individually assessed for impairment by considering information such as the occurrence of significant
changes in the counterparty’s financial position, patterns
of historical payment information, disputes and compliance
with ASML terms and conditions.
Liquidity risk
Liquidity r
isk is the risk that the syndicate’s assets are insufficient to fund the obligations arising from its insurance
contracts and financial liabilities as they fall due or can only be met by incurring additional costs. Due to the funds
withheld nature of the contract the syndicate wrote, liquidity risk is initially borne by Syndicate 1971, but the
syndicate is indirectly sensitive to the liquidity risk associated with cash payments made by Syndicate 1971 on
behalf of the syndicate.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
30
4. Risk and capital management (continued)
Management of liquidity risk
ASML’s approach to managing its
liquidity risk is as follows:
•
forecasts are prepared and revised on a regular basis to predict cash outflows from insurance contracts and
overheads over the short, medium and long term;
•
the syndicate purchases assets with durations not greater than its estimated insurance contract liabilities and
expense outflows;
•
assets purchased by the syndicate are required to satisfy specified marketability requirements;
•
the syndicate maintains cash and liquid assets to meet outgoing payments;
•
the syndicate regularly updates its contingency funding plans to ensure that adequate liquid financial resources
are in place to meet obligations as they fall due in the event of reasonably foreseeable abnormal circumstances;
and
•
liquidity stress testing is performed for the syndicate, looking both at cash flow liquidity and shock loss scenarios.
ASML holds sufficient premium trust funds in money market funds to meet daily liquidity. Holdings in money market
funds are well diversified, liquid and generally low risk. There is, however, a risk that the fund does not have sufficient
liquidity to meet all redemptions in extreme conditions. The fixed income short-dated government and corporate
bond portfolio is relatively liquid and can be realised within a matter of days under normal market conditions.
ASML is able to make cash calls from the members of
the managed syndicates to fund losses in the event that
funds are needed ahead of closing the year of account. In extreme circumstances, ASML syndicates could also
apply to utilise the Lloyd’s central fund as a last resort to pay liabilities.
Maturity analysis of syndicate liabilities
The syndicate operates on a funds withheld basis and the maturity analysis presented in the table below shows the
underlying remaining contractual maturities that will be fulfilled by Syndicate 1971 for the insurance contracts and
financial liabilities. For insurance and reinsurance contracts, the contractual maturity is the estimated date when the
gross undiscounted contractually required cash flows will occur. Syndicate 1971 manages its liquidity for itself and
Syndicate 1925. In addition to the cash flows below Syndicate 1971 will recover losses from members on the closure
of each year of account.
Carrying
amount
Less than
1 year
1-3
years
3-5
years
More than
5 years
2024
$’000
$’000
$’000
$’000
$’000
Claims outstanding
12,872
2,106
3,722
1,750
5,294
Other credit balances
23
-
23
-
-
Total liabilities
12,895
2,106
3,745
1,750
5,294
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices, excluding those that are caused by credit downgrades which are included under credit
risk. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk within the framework set by
ASML’s
investment policy.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
31
4. Risk and capital management (continued)
Management of market risk
For each of the major components of market risk the syndicate has policies and procedures in place which detail
how each risk should be managed and monitored. The management of each of these major components of market
risk and the exposure of the syndicate at the reporting date to each major component are addressed below.
Interest rate risk
The syndicate shares interest rate risk through the allocation of investment return under the funds withheld
arrangement. Interest rate risk arises primarily from the exposure to financial investments and overseas deposits.
Exposure to significant fluctuations in market value due to changes in bond yields is managed through investment
in short duration securities. Investment types include short dated fixed income bonds and money market funds.
Currency risk
Currency risk is the risk that the fair value or future cash flows of the syndicate’s assets and liabilities will fluctuate
because of changes in foreign exchange rates.
The syndicate writes business primarily in Sterling, Euros, US Dollars and Canadian Dollars and is therefore
exposed to currency risk arising from fluctuations in the exchange rates of its functional currency (US Dollars)
against these currencies.
The foreign exchange policy is to maintain assets in the currency in which the cash flows from liabilities are to be
settled in order to hedge the currency risk inherent in these contracts so far as is allowed by regulatory requirements
and for any profit or loss to be reflected in the net assets of the functional currency. As a syndicate operating on a
funds withheld basis actions cannot be taken within the syndicate to match currencies. However, the host, Syndicate
1971, takes actions to the extent considered appropriate to match currencies on behalf of the syndicate.
The table below summarises the carrying value of the syndicate’s assets and liabilities, at the reporting date:
Sterling
US Dollar
Euro
Canadian
Dollar
Total
2024
$
’
000
$
’
000
$
’
000
$
’
000
$
’
000
Reinsurers' share of technical provisions
517
11,762
917
78
13,274
Debtors
355
8,826
3,995
327
13,503
Prepayments and accrued income
1,000
3,742
1,018
-
5,760
Total assets
1,872
24,330
5,930
405
32,537
Technical provisions
(2,737)
(21,273)
(4,351)
(211)
(28,572)
Accruals and deferred income
(288)
(2,557)
(293)
-
(3,138)
Total liabilities
(3,025)
(23,830)
(4,644)
(211)
(31,710)
Total capital and reserves
(1,153)
500
1,286
194
827
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
32
4. Risk and capital management (continued)
Sensitivity analysis to market risks
An analysis of the syndicate’s sensitivity to currency risk is presented in the table below. The table shows the effect
on profit or loss of reasonably possible changes in the relevant risk variable. The sensitivity analysis assumes that
all other variables remain constant and that the exchange rate movement occurs at the end of the reporting period.
The impact of exchange rate fluctuations could differ significantly over a longer period. The occurrence of a change
in foreign exchange rates may lead to changes in other market factors as a result of correlations.
2024
Impact on
profit for the
financial year
Impact on
members'
balances
Currency risk
$’000
$’000
10 percent strengthening of GBP against USD
(128)
(128)
10 percent weakening of GBP against USD
105
105
10 percent strengthening of Euro against USD
143
143
10 percent weakening of Euro against USD
(117)
(117)
Other price risk
The syndicate is subject to other price risk through the funds withheld arrangement with Syndicate 1971.
Investments in Syndicate 1971 comprise holdings in short dated fixed income government and corporate bonds
and money market funds. The bond portfolio is relatively low risk being both short dated and investment grade
securities and therefore it has limited sensitivity to market movements.
The money market funds are near cash and therefore have minimal exposure to market movements.
It is not practical to allocate the Syndicate 1971 assets to the syndicate and therefore a fair value hierarchy
categorising the assets to which the syndicate is exposed according to the level of judgement exercised in valuation
has not been provided.
Capital management
Capital framework at Lloyd’s
Lloyd’s is a regulated undertaking and subject to supervision by the PRA under the Financial Services and Markets
Act 2000, and in accordance with the Solvency II Framework.
Within this supervisory framework, Lloyd’s applies capital requirements at member level and centrally to ensure that
Lloyd’s compl
ies with the Solvency II requirements, and beyond that to meet its own financial strength, licence and
ratings objectives.
Although, as described below, Lloyd’s capital setting processes use a capital requirement set at syndicate level as
a starting point, the requirement to meet Solvency II and Lloyd’s capital requirements apply
respectively at overall
and member level only, not at syndicate level. Accordingly, the capital requirement in respect of the syndicate’s
members is not disclosed in these annual accounts.
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
33
4. Risk and capital management (continued)
Lloyd’s capital setting process
In order to meet Lloyd’s requirements, each syndicate is required to calculate its SCR for the prospective
underwriting year. This amount must be sufficient to cover a 1 in 200 year loss, reflecting uncertainty in the ultimate
run-off of underwriting liabi
lities (SCR ‘to ultimate’). The syndicate must also calculate its SCR at the same
confidence level but reflecting uncertainty over a one year time horizon (‘’one year’’ SCR) for Lloyd’s to use in
meeting Solvency II requirements. The SCRs of each syndicate
are subject to review and approval by Lloyd’s.
Initially ASML calculates
the syndicate’s
SCR
using the Lloyd’s Standard Model.
Once a syndicate becomes
sufficiently established ASML develops an internal model in house to calculate the SCR for the syndicate. The SCR
is reviewed and approved by the Board through the ORSA process and an independent annual internal model
validation process.
A syndicate may be comprised of one or more underwriting members of Lloyd’s. Each member is liable for their
own share of underwriting liabilities on the syndicates on which they participate but not for other members’ shares.
Accordingly, the capital requi
rements that Lloyd’s sets for each member; operate on a similar basis. Each member’s
SCR is based on the member’s share of the syndicate’s SCR ‘to ultimate’.
Where a member participates on more than one syndicate, Lloyd’s sums together each syndicate’s SCR but a credit
for diversification is allowed to reflect the spread of risk consistent with determining an SCR which reflects the capital
requirement to cover
a 1 in 200 year loss ‘to ultimate’ for that member. Over and above this, Lloyd’s applies a capital
uplift to the member’s capital requirement, known as the ECA. The purpose of this uplift, which is a Lloyd’s rather
than a Solvency II requirement, is to sup
port Lloyd’s financial strength, licence and ratings objectives.
Provision of capital by members
Each member may provide capital to meet their ECA by assets held in trust by Lloyd’s specifically for that member’s
FAL
, or as the member’s share of the members’ balances on each syndicate on which they participate.
Accordingly, all of the assets less liabilities of the syndicate, as represented in the members’ balances reported on
the balance sheet, represent resources available to meet members’ and Lloyd’s capital requirements.
5. Analysis of underwriting result
All business written by the syndicate is reinsurance. All premiums were underwritten in the United Kingdom.
An analysis of the underwriting result before investment return is set out in the table below:
Year of account development
The result before members’ agents’
fees of $881,000 relates to the 2024 year of account.
Gross
premiums
written
Gross
premiums
earned
Gross
claims
incurred
Gross
operating
expense
Reinsurance
balance
Total
2024
$’000
$’000
$’000
$’000
$’000
$’000
Reinsurance:
Reinsurance acceptances
41,717
25,863
(12,994)
(9,007)
(2,995)
867
Total
41,717
25,863
(12,994)
(9,007)
(2,995)
867
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
34
6. Net operating expenses
2024
$’000
Acquisition costs
13,311
Change in deferred acquisition costs
(5,832)
Gross acquisition costs
7,479
Administrative expenses
624
Members’ standard personal expenses
904
Reinsurers’ commissions and profit participations
(3,616)
Net operating expenses
5,391
Administrative expenses include the following:
2024
$’000
Audit fees
Fees payable to the
syndicate’s auditor for the audit of the syndicate’s annual financial
statements
56
Non-audit fees
F
ees payable to the Syndicate’s auditor and its associates in respect of other services
pursuant to legislation
33
Other non
–
audit fees
26
Total
115
ASML incurred
audit fees payable to the syndicate’s auditors of $
46,000 and other assurance services of $6,000.
7. Emoluments of the directors of the managing agent
For the purposes of FRS 102, the directors of ASML are deemed to be the key management personnel.
For the period ending 31 December 2024, the remuneration recharged to the syndicate for the directors of ASML is
$1,000 which is charged as a syndicate expense.
The Active Underwriter is an employee of Envelop and is seconded to ASML, there is no specific expense allocation
of their emoluments to the syndicate.
8. Staff number and costs
All staff are employed by a related company of ASML. The following amounts were recharged to the syndicate in
respect of salary costs:
2024
$’000
Wages and salaries
170
Social security costs
11
Pension costs
3
Total
184
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
35
8. Staff numbers and costs (continued)
The average monthly number of employees employed by the managing agency or related companies but working
for the syndicate during the year was as follows:
2024
Number
Underwriting
1
Management, administration and finance
1
Total
2
During 2024 there were six non-executive directors on the ASML board who allocated their time to the syndicate.
9. Investment income
2024
$’000
Income received from related syndicates
50
Total
50
Investment income represents the return achieved by Syndicate 1971 and attributable to the business undertaken
on behalf of the syndicate.
10. Other debtors
2024
$’000
Inter syndicate balances
13,503
Total
13,503
Amounts due from Syndicate 1971 represents the net funds withheld balance receivable under the quota share
contract.
11. Deferred acquisition costs
The table below shows changes in deferred acquisition costs assets from the beginning of the period to the end of
the period.
Gross
Reinsurance
Net
2024
$’000
$’000
$’000
At 1 January
-
-
-
Incurred deferred acquisition costs
13,311
(6,749)
6,562
Amortised deferred acquisition costs
(7,479)
3,616
(3,863)
Foreign exchange adjustments
(72)
18
(54)
At 31 December
5,760
(3,115)
2,645
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
36
12. Claims development
The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for
each successive underwriting year at each reporting date, together with cumulative payments to date.
Balances have been translated at exchange rates prevailing at 31 December 2024 in all cases.
Gross claims development as at 31 December 2024:
2024
Pure underwriting year
$’000
Estimated gross claims
At end of underwriting year
12,874
Estimate of gross claims reserve
12,874
Less gross claims paid
(2)
Gross claims reserve
12,872
Net claims development as at 31 December 2024:
2024
Pure underwriting year
$’000
Estimated net claims
At end of underwriting year
8,382
Estimate of net claims reserve
8,382
Less net claims paid
(2)
Net claims reserve
8,380
All balances presented are in respect of premiums earned to the balance sheet date and therefore reflect the pattern
of earnings and risk exposed over a number of calendar years. This is the first year of trading and therefore there
is no historic development.
13. Technical provisions
The table below shows changes in the insurance contract liabilities and assets from the beginning of the period to
the end of the period.
Gross
provisions
Reinsurance
assets
Net
2024 - Claims outstanding
$’000
$’000
$’000
Balance at 1 January
-
-
-
Claims paid during the year
(2)
-
(2)
Expected cost of current year claims
12,994
(4,530)
8,464
Effect of movements in exchange rate
(120)
38
(82)
Balance at 31 December
12,872
(4,492)
8,380
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
37
13. Technical provisions (continued)
Gross
provisions
Reinsurance
assets
Net
2024
–
Unearned premium
$’000
$’000
$’000
Balance at 1 January
-
-
-
Premiums written during the year
41,717
(19,934)
21,783
Premiums earned during the year
(25,863)
11,141
(14,722)
Effect of movements in exchange rate
(154)
11
(143)
Balance at 31 December
15,700
(8,782)
6,918
Refer to Note 4 for the sensitivity analysis performed over the value of insurance liabilities, disclosed in the accounts,
to potential movements in the assumptions applied within the technical provisions.
14. Accruals and deferred income
2024
$’000
Reinsurers share of deferred acquisition costs
3,115
Managing agent’s profit commission
23
Total
3,138
15. Related parties
All business with related parties is transacted on an arm’s length basis.
ASML is
a wholly owned subsidiary of Apollo Group Holdings Limited (“AGHL”).
Metacomet LLC, a US incorporated limited company, is a shareholder of AGHL and has a seat on the board.
The syndicate is a SPA with Syndicate 1971 as the host. A single 80% quota share reinsurance contract is in place
for each year of account ceding all gross premiums and related expenses and investment income. All transactions
set out in the annual accounts have been undertaken by Syndicate 1971 on behalf of the syndicate. On closure of
a year of account the Syndicate 1971 distribution will be settled by the syndicate. The related party transactions
and amounts outstanding at the balance sheet date are shown below:
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
38
15. Related parties (continued)
2024
Syndicate 1971
$’000
Gross written premium receivable
41,717
Claims payable
(2)
Expenses payable
1,586
Allocated investment return
50
Other debtor
13,503
In accordance with the Managing Agent’s Agreement, ASML accrued managing agent’s fees (0.9% of syndicate
capacity) and profit commission (2.5% of profit). A three-year deficit clause is in place which requires losses
experienced by existing names to be offset by future profits before further profit commission becomes payable.
Apollo Partners LLP (“
APL
”) is a wholly owned subsidiary of AGHL which
employs all Apollo group staff, including
underwriters, claims and reinsurance staff. APL provides the services of these staff to ASML to enable it to function
as managing agent for the syndicate. APL is the appointed representative of ASML. APL also incurs a large
proportion of the expenses in respect of operating the syndicate. The cost of these services and expenses are
recharged to ASML which in turn recharges these to the syndicate, via Syndicate 1971, on a basis that reflects
usage of resources, all recharges being without any mark up on cost.
2024
ASML
$’000
Managing agent’s fee
514
Expense recharges
675
Managing agent
’
s profit commission
23
There are no amounts payable directly to ASML; these are reflected in the balances with Syndicate 1971.
Envelop Risk has seconded Chris Baddeley to ASML as Active Underwriter since 1 January 2024 and the cost has
been recharged to the syndicate. Services provided by Envelop Risk include strategy setting, the underwriting of
new business, claims handling and oversight. These expenses are paid by Syndicate 1971 as the host syndicate
and recharged through the quota share reinsurance arrangement.
16. Post balance sheet events
There were no post balance sheet events.
17. Foreign exchange rates
The following currency exchange rates have been used for principal foreign currency transactions:
2024
Start of
period rate
End of
period rate
Average rate
Sterling
US Dollar
Euro
Canadian Dollar
Syndicate 1925
Notes to the annual accounts
As at 31 December 2024
39
18.
Funds at Lloyd’s
Every member is
required to hold capital at Lloyd’s which is held in trust and known as Funds at Lloyd’s
(“FAL”)
.
These funds are intended primarily to cover circumstances where syndicate assets prove insufficient to meet
participating members’ underwriting liabilities. The level of FAL that Lloyd’s requires a member to maintain is
determined by Lloyd’s based on
PRA requirements and resource criteria. The determination of FAL has regard to
a number of factors including the nature and amount of risk to be underwritten by the member and the assessment
of the reserving risk in respect of business that has been underwritten. Since FAL is not under the management of
the Managing Agent, no amount has been shown in these annual accounts by way of such capital resources.
However, the Managing Agent is able to make a call on the Member’s FAL to meet liquidity requirements or to settle
losses.